Rejection of casino proposals prompts new questions in Cedar Rapids

City manager: Expect discussion soon about future of riverfront land

The site of a once proposed casino across the Cedar River from downtown Cedar Rapids between Interstate 380 and Second Ave SW and First and Third Streets. Shot on Monday, March 7, 2016. (Cliff Jette/The Gazette)

CEDAR RAPIDS — When state gambling regulators closed the door — at least for now — this week on a casino in Cedar Rapids, they set in motion discussion on a number of items, including the future of a large, vacant plot of land at the city’s core where developers have proposed for years to build Cedar Crossing on the River.

Members of the Cedar Rapids City Council already have expressed interest in inviting other proposals for the 8 acres along the Cedar River near First Avenue and First Street SW, such as for retail or housing, but the council is in transition as at least four new members — all elected this month — are rotating on in January.

“The decision is the council’s to make whether to free it up for development or preserve it for a casino, but my recommendation is pulling experts and community members together and develop a vision for that property,” said Cedar Rapids City Manager Jeff Pomeranz, estimating the discussion could begin in the next six months.

Jonathan Swain, an official with Cedar Crossing, said there would be no protest if city officials develop other plans for the property. An exclusivity agreement through 2029 restricts Cedar Rapids from supporting a casino other than Cedar Crossing.

“If it is available at the time we send in the next application, we’d certainly use that piece of property,” Swain said. “If there is a higher, better use today the city of Cedar Rapids should take advantage.”

The $165 million Cedar Crossing on the River was one of three casino applications rejected Thursday by the Iowa Racing and Gaming Commission, which voted 3-2 against the proposals. It was the second time in three years a Cedar Rapids casino has been shot down.

Other loose ends

Also proposed Thursday were plans for the $105 million Cedar Crossing Central, attached to the DoubleTree Hotel on First Avenue NE, and the $40 million Wild Rose Cedar Rapids, next to the Skogman Building on First Avenue SE. Rejection of these proposals also raises a few important questions moving forward.

Cedar Crossing Central plans included replacement of the aging Five Season Parking ramp using new tax revenue from the casino. The parking ramp is reaching the end of its life, and could cost taxpayers $25 million to replace. While supporters touted the new parking ramp as a selling point, it has another 10 to 15 years before the city needs to act, Pomeranz said.

Wild Rose was pitched as part of a four-story building — with the casino as the major tenant on the second floor — to be located in the “under utilized” block on First Avenue East between the train tracks and Fifth Street SE. Developer Steve Emerson owns most of the block and planned to build the structure on what is now a surface parking lot.

He said the property will stay in a holding pattern for now.

“This building won’t move forward without the casino,” Emerson said. “It’s just a concept we put together. If somebody came forward and said we need two floors in a building we’d put something together.

“All of these are just opportunities.”

Accentuating the positives

Overhead map of proposed casino locations

Map by John McGlothlen / The Gazette

During Thursday’s meeting of the Iowa Racing and Gaming Commission at the Diamond Jo Casino in Dubuque, those casting the three “no” votes — Carl Heinrich of Council Bluffs, Jeff Lamberti of Ankeny and Kristine Kramer of New Hampton — offered few clues of what might be appealing in a future Cedar Rapids casino application, and no signal on when might be the right time to apply.

They only said they couldn’t tolerate a high level of negative impact or cannibalization on existing casinos in the state or the spillover loss of jobs and charity contributions in host communities.

Lamberti, however, shared his impressions of what attributes the commission found appealing.

“There is some indication coming out of this that commissioners are willing to consider a downtown casino more than a huge structure on the outskirts,” he said.

Cedar Crossing Central, which was designed as a skydeck between a new parking ramp and the DoubleTree, was most intriguing and would have been his top choice, Lamberti said. The balance of a smaller gambling floor combined with amenities normally found in a larger casino and major local benefits carried more weight than new tax revenue for the state, he said.

“There was a lot of appeal about what a downtown casino could do for the city of Cedar Rapids,” Lamberti said “(Cedar Crossing Central) had potential to really be a shot in the arm for the city. It was an extremely creative proposal.”

Chairman Richard Arnold, of Russell, who joined commission member Dolores Mertz, of Algona, in voting for a Cedar Rapids casino, offered the only application-by-application evaluation.

He said Cedar Crossing on the River would disrupt local businesses and wouldn’t complement the downtown and Wild Rose didn’t offer anything beyond gambling.

Cedar Crossing Central, though, “brought something special unmatched” by the other projects, he said. It had a small gambling footprint that would limit economic impact on existing casinos, yet brought a major financial impact and offered significant community benefits, including the new parking garage and filling rooms in the DoubleTree Hotel, which is owned by the city.

Changing the landscape

In the wake of the no vote, Cedar Rapids Mayor Ron Corbett, who is running for governor, said the state needs to redesign the process in which casinos must donate at least 3 percent of revenue to their host communities.

“If the state is going to basically close the door on any new opportunities, not just in Cedar Rapids but Fort Dodge, Ottumwa and other places that want a casino, we really need to look at a redistribution of resources so it doesn’t just go to local counties,” Corbett said. “It doesn’t seem fair.”

They “need the Cedar Rapids market to be profitable or viable, but they aren’t putting any money in the Cedar Rapids market other than advertising to get Cedar Rapids residents to come to their casino,” he said.

Corbett also said it’s “time to clean house” on the Racing and Gaming Commission.

The four-year terms of commissioners Kramer and Mertz expire in 2018. With a new governor — Kim Reynolds — appointing new members, the mind-set of the board could change in the future.